Visions in Leisure and Business Volume 20 Number 1 Article 2 2001 Cross-border Shopping in Hungary: Causes and Effects Gabor Michalko Hungarian Academy of Sciences Dallen J. Timothy Arizona State University Follow this and additional works at: https://scholarworks.bgsu.edu/visions Recommended Citation Michalko, Gabor and Timothy, Dallen J. (2001) "Cross-border Shopping in Hungary: Causes and Effects," Visions in Leisure and Business: Vol. 20 : No. 1 , Article 2. Available at: https://scholarworks.bgsu.edu/visions/vol20/iss1/2 This Article is brought to you for free and open access by the Journals at ScholarWorks@BGSU. It has been accepted for inclusion in Visions in Leisure and Business by an authorized editor of ScholarWorks@BGSU. CROSS-BORDER SHOPPING IN HUNGARY: CAUSES AND EFFECTS BY GABOR MICHALKO, SENIOR RESEARCHER GEOGRAPHICAL RESEARCH INSTITUTE, HUNGARIAN ACADEMY OF SCIENCES BUDAORSI UT 45 BUDAPEST 1112, HUNGARY AND DALLEN J. TIMOTHY, ASSISTANT PROFESSOR DEPARTMENT OF RECREATION MANAGEMENT AND TOURISM PO BOX 874905 ARIZONA STATE UNIVERSITY TEMPE, ARIZONA 85287 USA ABSTRACT INTRODUCTION Shopping tourism in Eastern Europe has The political changes occurring in Central grown enormously since the 1970s, and the and Eastern Europe (CEE) during the past geopolitical changes that occurred in the 15 years have wrought manifold transfor­ late 1980s and early 90s had a major bear­ mations in tourism. With the easing of ing on its development. Within the context travel restrictions ( e.g. visas and currency of shopping tourism, this paper examines controls) in CEE, travelers from Western cross-border shopping trends in Hungary, Europe, North America, and the Asia­ which is one of the most prominent shop­ Pacific region began to arrive in greater ping destinations in the former communist numbers. In fact international arrivals in bloc. After a description. of the phenome­ several east European countries, such as non and its magnitude in Hungary, spatial the Czech Republic, Poland, Hungary, and patterns in the borderlands are considered Romania, increased so dramatically during and the probable impacts of Hungary's the 1990s, that several of them were future admission into the European Union included in the World Tourism are explained. Organization's list of top twenty world destinations. The former communist bloc Keywords: shopping tourism, Hungary, countries still continue to be an inexpensive cross-border shopping, European Union alternative to the costlier west European options. This, together with increased freedom �f travel and increasing affluence, 4 has- resulted in GOntjnued tourism growth in \Vith the exception of Hungarians and the East ( 45). One aspect of these tourism Yugoslavians, for residents of the East, trends that has all but been ignored by access tq the West was strongly restricted researc_hers is cross-border shopping. until the 1990s. Once capitalism was in­ troduced, however, the forbidden West and During the 1970s and 80s, cross-boundary the more liberal eastern bloc countries be­ shopping boomed in Central and Eastern came the destinations of choice for east­ Europe and was one of the most important erners. This resulted in huge influxes of types of international travel in the region tourists from east to west, and in the cases prior to the change to capitalism. In state of Bulgaria, Czechoslovakia, Poland, Ro­ socialist systems where domestic fixed mania, and the Soviet Union, outbound prices and limited product variety reduced travel in 1990 far surpassed that of 1989, in purchasing opportunities, residents were some cases doubling and tripling within the unable to spend as much of their incomes space of one year (18, 45). In the early as they desired. This resulted in two 1990s, the economy of shortages and un­ trends: forced savings· and shopping trips even development, which prevailed in the · to more liberal communist neighbors where countries behind the 'iron curtain', en.co.ur­ some elements of a free market functioned aged east Europeans to shop in neighbor­ (e.g. Hungary and Yugoslavia) (44). ing countries in search of goods and serv­ ices that were scarce and/or expensive at In the early 1990s, the collapse of state home ( 15, 32, 44). High quality, brand­ socialism in CEE resulted in a distinct bor­ name goods and articles on the list of der economy, comprised of international conunodities banned from import or liable day labor, prostitution, informal trading, to embargo were purchased and imported, and low-cost assembly plant operations (9). often without being taxed. In most. cases Much of this trans-border activity was the savings and revenues from these 'ex­ made up of traders, who traveled to neigh­ port-import activities' covered travel ex­ boring countries with truckloads and sacks penses. Minghi (31, p. 34) explains it this of meats, vegetables, clothing, shoes, and way: electronics in an effort to sell them abroad and those who traveled with empty sacks With the end of the Cold War in to purchase goods to sell at home upon the late 1980s and the inevitably their return (7). At the same time, western long time-lag necessary for eco­ Europeans began flooding into the East to nomic systems in the East to switch purchase consumer products at signifi­ fromstate control and ownership to cantly lower prices than at home. In the a free market economy, it is hardly early 1990s, for example, thousands of surprising that borderlands along Germans crossed into Poland every week the· East-West interface underwent to purchase low-price household goods. rapid change, including the instant At first this was a one-way flow of prod­ development of the daily shopper ucts and people, for Poles could hardly phenomenon from the East to ex­ afford the goods on offer in neighboring ploit the advantages offered by communities in Germany (8, 37), but it has continuing price and availability in since b�gun to flow in both directions. the West courled with the new op­ portunity to move and transport 5 goods much more freely. At the Owing to its favorable geographical setting same time, changes in the political and liberal economic policies, Hungary regimes meant that what would played a prominent role in the development have been a serious crime of ex­ of east European shopping tourism. In the ploitation and profiteering against 1980s bazaars and market places began the state was now seen as a legiti­ mushrooming throughout the country, mate entrepreneurial demand-based where goods smuggled into Hungary from activity. Poland, Romania, the USSR, and Turkey were offered for sale, particularly for Aus­ This also reflects the fact that for many trians who rushed to the country's western people this was their first opportunity to counties en masse to purchase inexpensive travel abroad, particularly outside the consumer products (17, 36). Following the eastern bloc. Cold War, as a result of emerging market economies, rising living standards, and As a result of these momentous changes, shortages at home, citizens of other post­ border zones in the transforming econo­ communist countries began a rush to shop mies of CEE have shifted from being pe­ in Hungary. Thus began one of Hungary's ripheries to areas of dynamic economic largest tourism activities. A recent study growth, whose mainstay is cross-border ( 14) concluded that the primary reason for trade and tourism (37, p. 211). In some travel to Hungary among foreigners is border communities, trans-boundary trade shopping. has become the livelihood of over half their populations, and market places/bazaars are The purpo'.-1(! of this paper is to examine the developing all along the borders of CEE phenomenon of cross-border shopping in (37). Hungary. It, role in Hungarian tourism is examin<:d. and its spatial characteristics are The shopping phenomenon that was cre­ analyzed. Finally the paper predicts some ated by the boundary situation in CEE, of the dkl'h of Hungary's joining the among traders as well as individuals who Eurol)\:an L" nion on this unique form of purchased for their personal consumption, con�una:r a,ti\'ity. began to be viewed in the 1990s by ob­ servers as a unique form of tourism ( e.g. 15-18, 30-31, 44). For most consumers, Shoppin� Tourism: Leisure Pursuit these trips were international· excursions or Foreign Trade? lasting less than a day, while for others they became part of a complex system of While lra\d for the purpose of shopping trade where hotels, restaurants, and other has exi,ted ,ince ancient times, its role as services were utilized over the course of part of th� tourist experience or the pri­ two or more days. In most cases, how­ mary motive for travel is only now begin­ ever, shoppers typically slept in the homes ning to be understood. Shopping has long of relatives or on buses, and they com­ been a leisure pursuit, providing opportu­ monly brought their own food from home nities for social interaction, release from (31). everyday stress, and unique venues (e.g. malls) where people can browse or make purchases: In the realm of tourism, shop- 6 ping can be viewed as an activity under­ and small towns and villages have under­ taken as part of a vacation experience. In gone transformations from agriculture- and these terms Heung and Qu (20, p. 383) resource. extraction-based communities to defined tourist shopping as the expenditure well-known centers of shopping ( 12, 13). on items purchased in the destination by visitors, either for consumption in the des­ Cross-border shopping is a form of shop­ tination or for export but not including ping tourism that has not been examined expenditures on food, drink or grocery much in the tourism literature. Perhaps items. According to the study by Heung this is because it often takes place LT} less and Qu (20), approximately half of the than 24 hours, its participants thefeby fal­ expenditures in Hong Kong by foreign ling outside the WTO official definition of visitors between 1985 and 1995 was com­ tourist.